Investment Q&A

Certainly it is concerning, but the key point is that fundamentals have not changed. Much will depend on whether revenue/earnings targets continue to be met, of course. Any deterioration there will cause more angst for investors and could make investors believe further in the AI-threat thesis. Thus, this year becomes quite crucial in terms of which direction these will go longer term. Right now, though, investors are selling 'because they are down' and on fear, and not for anything that has been displayed in the fundamentals so far. Volume has picked up but not really enough to be classified as capitulation. To us it looks like a large fund or two exiting, and taking its time to do so. With the stocks relatively thin traders, this can result in larger drawdowns. Combined with the current fear, this selling results in even more concerns. We are still generally confident that fundamentals have not deteriorated anywhere close to the degree of the stock deterioration. But there are unknowns here, and these stocks may not get their premium valuations back until it is entirely clear their business prospects have not changed.